Post-Mortem Of Bernanke's Prepared Remarks

Here's Bernanke's list of the costs/risks associated with further asset purchases, and his assessment about the severity of those risks:

1. On the cost that concern about exit will undermine long term inflation expectations: In Bernanke's words, "the committee remains confident that it has the tools necessary to tighten monetary policy when the time comes to do so". He points to recent inflation trends which remain subdued, and to inflation expectations which remain well anchored in Bernanke's view.

2. On financial stability risks: The Fed's longstanding view is that monetary policy is too blunt a tool to deal with potential mispricing of risk in various asset markets and instead these concerns should be addressed through supervisory channels. Bernanke appears to cling heavily to this view. He notes in his testimony that the Fed has substantially expanded its monitoring of the financial system. The Fed's approach to supervision of financial firms has also taken a more systemic perspective since the crisis. Bernanke acknowledges that a long period of low rates could encourage excessive risk-taking, but concludes that the potential costs outweigh the benefits of promoting a stronger recovery and more rapid job creation.

3. On the risk of future capital losses and their implication for the federal budget: Bernanke acknowledges, in-line with recent Fed studies, that asset sales in a rising rate environment could lead to a period of capital losses. This, in turn, may force the Fed to suspend remittances to the Treasury, which could have an adverse impact on budget projections. Bernanke downplays these concerns and suggest that the Fed's activities have to be viewed holistically. He notes that even in the case of sharply reduced remittances to the Treasury in future years, total remittances during the entire balance sheet expansion will have been larger than during the pre-crisis period. He also underscores that better economic outcomes will ultimately improve the budget situation, implicitly arguing in favour of further asset purchases rather than against them.

Leaning against fiscal restraint

Bernanke also warns that the sequester could impose additional near-term burden on the recovery. He cites the CBO's estimate that it will contribute to 0.6% of fiscal drag this year. This is on top of the drag from tax increases that went into effect on Jan 1. In the context of the fiscal tightening currently underway, Bernanke does not seem to be in a hurry to scale back QE in the near future.

* * *

Of course, none of the above commentary from SocGen does nearly enough justice to Bernanke's response to Senator Shelby whether the Fed's record balance sheet has ever been higher: "there are other central banks whose balance sheets have been this large, such as Japan."

Well, since it worked for Japan.

Finally this, which the market may want to pay attention to: Bernanke says there may be ‘frothiness’ in some asset classes.

"The Fed's longstanding view is that monetary policy is too blunt a tool to deal with potential mispricing of risk in various asset markets and instead these concerns should be addressed through supervisory channels. "

[monetary policy lifts all boats. which is unfortunate. we want to selectively lift housing and s&p. therefore we use .. let's call them 'supervisory channels' .. we need to manipulate .. um .. let's call it 'deliberately direct' .. certain sectors so that the numbers conform to numbers that would indicate economic health, while suppressing numbers that would indicate economic trouble]

"The Fed's longstanding view is that monetary policy is too blunt a tool to deal with potential mispricing of risk in various asset markets..."

~~~

Translation: "The Fed's longstanding achievement has been that we're a bunch of BLUNT TOOLS, who can do no more than misprice risk & asset markets because we're rank academics when it comes to formulating monetary policy"

There really is no fucking end to this pricks arrogance!!! If I have to listen to this smug bearded fuck much longer, I'm going to start drinking at 8am!!

And on another note, while I'm ranting, I'm getting tired to watching these BS MSM outlets running "stories" on how all these poor fucking .gov workers are going to be ruined by the "job cuts" coming! What the fuck do you think the rest of the County has been going thru for the last 5 years!! Where's their fucking news story?? Whats funny is, these idiots thought because they were in the gov, they were immune from reality!

Gov jobs are most bloated, inefficient, lazy, bullshit, overpaid jobs on the planet! The sooner we cut 10 million more of these bullshit jobs and open up the RFP process for private business to fill the void, the better!

I have heard NOTHING that would change my opinion that our government and Fed are completely working against our economic interests. I do not believe that either the Congress (include Obama here) or the Fed will do anything positive.

Sorry Gretel but they've been dog foching you for years and listening to him shows you still believe that something he might say would be otherwise truthful or at the very least worth listening to.........

He's thinking about his legacy, and how it's becoming painfully obvious that his great book that he'll write a few years from now will have to be titled something like "How I was really right all the time I was wrong".

Suspension of payments or real interest rate hikes (range bound at or below 2% on the ten year now) are the death knell. Neither will be allowed to occur publically so long as the U.S. military and the MIC retains it's current position in the world

Man, I sure wish you would quit SPAMMING ZH with ads for that pitifully lame YouTube video you made.

However, since you haven't got the common sense to realize that you should be ashamed of that embarrassing farce, I doubt you will stop on your own. Perhaps a Tyler will also grow weary of you SPAMMING their boards.

This is the most surreal Fed hearing in my memory. Not only are some very long postponed "concerns" being put to Mr. Bernanke, also...Mr. Bernanke's poor lying skills are well on display.

Anticipating a close today with far, far less "hope" than is priced in at this point in the market session. It would appear that a thought I posited sometime back is sharpening...namely that the nexus between DC and Wall Street is cracking, and that these two entities seem to be preparing to blame one another...for what is clearly coming.

Would like to see just one eCONomist try and explain what the "price" of something is that is required for survival, but that is either unavailable or that I refuse to sell. Supply lines have very real inputs that cannot be printed out of thin air. Humanity isn't just a ponzi, it's the ponzi.

"Bernanke truly believes he can reflate the bubble" NO, HE truely WANTS YOU to believe it!

He's not stupid, he IS a lying deciever

the below is from "the Protocols of the Learned Elders of Zion"

"WE ARE WOLVES

4. The GOYIM are a flock of sheep, and we are their wolves. And you know what happens when the wolves get hold of the flock? ....

5. There is another reason also why they will close their eyes: for we shall keep promising them to give back all the liberties we have taken away as soon as we have quelled the enemies of peace and tamed all parties ....

6. It is not worth to say anything about how long a time they will be kept waiting for this return of their liberties ....

7. For what purpose then have we invented this whole policy and insinuated it into the minds of the GOY without giving them any chance to examine its underlying meaning? For what, indeed, if not in order to obtain in a roundabout way what is for our scattered tribe unattainable by the direct road? It is this which has served as the basis for our organization of SECRET MASONRY WHICH IS NOT KNOWN TO, AND AIMS WHICH ARE NOT EVEN SO MUCH AS SUSPECTED BY, THESE "GOY" CATTLE, ATTRACTED BY US INTO THE "SHOW" ARMY OF MASONIC LODGES IN ORDER TO THROW DUST IN THE EYES OF THEIR FELLOWS.

I am losing faith that the opposition to proper monetary policy will ever understand that economics is a science, and with the rigor of a science, determinations are made for the betterment of our society. A lot of you are just angry with your lives. Maybe you lost your job, or fell out of love with a partner, but whatever it is, please understand that there is a group of people who have your best interests at heart and will do what is right so to put us back on track.

Tell us then, what is the "price" of something that is essential for your survival, but that is unavailable for delivery or that I refuse to sell? Do you refute that supply lines have very real inputs with hard limits? Come on, let's see if that nobel really means anything. Seems to me there is no limit to paper promises but if that is your only model, it has no foundation in reality.

btw. While I fail this at times a courtesy of letting people know your making a sarcastic post reveals some element of respect for those reading. So unless your the poster you are assuming based on your own subjective views.

No way to know if someone is being serious or not unless they say so, and even then people lie all the time especially on the web.

I have not achieved mind melded reading status and so some of us out here presume people mean what they write. But hell it only takes a day or two to realize at least 90% of the posts on this and other sites are people who get their kicks out of jerking on other peoples emotional strings.

Which shows to me entirely how our society has completely degenerated into faceless, sympathyless solipistic fucks who may actually deserve to get what they give.

Try to understand, though, that the anger and bitterness you persistently read here is the most appropriate initial response to relentless lying about data, bogus analysis, and pervasive propagandizing in virtually every corporate controlled venue on the planet.

In short, you're full of crap, and we're on to you. When the SHTF, where do you and your colleagues think you will be able to hide from people with nothing left to lose?

If it isn't the real Krugman, then the only alternative is that it is someone who is a satirical writer composing obviously ludicrious remarks for the purpose of illustrating the absurdity of Krugman, et. al.

Case in point, the Tylers and Roubini go at each other big on Twitter at times. This shit is real folks, there are real asshole PhDs with real egos and real online activities who cannot stand Austrian economics and want to (try) to show the world they are iSmart. Try, and fail.

I've heard and read (apparently just) enough of Krugman that that seems like his real voice to me.

As a public writer and commentator, it seemed reasonable to me that he might come here (among other sites) to publicly, in-your-face style do a little opposition research, and enjoy poking fun at the proles before he leaves.

A FED refi of mortgages = ZERO money into the economy becaused the money would NOT go to the homeowner... just a credit. And the money would NOT go to the banks either as they only get FED overnight/reserve credits. (Like the "purchase by the FED" of the MBS' where the FED paid NOTHING for them, but credited the bank's accounts at the FED - and meanwhile the FED started collecting the cash paid on mortgages by the home owners, thus actually reducing cash going to the banks.) How do you think The Bernank has avoided the appearance of overt inflation all this time while printing $trillions?

And the result would be more US debt with a ZERO "stimulus" to the economy. (Due to the broken window effect, spending of government money harms the economy, not helps it.)

So then if you and your PhD playmates are applying the "rigor of a science", you can no doubt cite some empirical (experimental) evidence supporting your hypothesis and proving that your monetary nostrums will repeatably result in the outcome you expect.

What? No? Then how can Economics be a Science if it cannot employ the Scientific Method?

Dr K you channel Krugman pretty well...the abject sanctimony, the stupidity of believe in the system that keeps failing, the defending of the out right rape of the American people by Wall Street with Washington's assistance. Didn't Greenspan keep saying that all is under control and there is no inflation or problems as housing prices triple along with food. You are in a bubble that logic can't reach...but you will be proven to be clueless nitwit that you are!

Explain why gasoline prices are near a record while demand is below 1980? It is called inflation? Explain why Wall Street is handing out record bonuses while the "regular" economy struggles? Please enlighten us where housing goes from hear...as interest bottom is bottom and normal people see no wage growth and the young have record unemployment....please show us how smart you are!

And while you stuggle to explain the economy...please explain why the paper you write for....is dying? Why no one but a few hard left liberal read it anymore? You and your paper are pretty much a laughing stock at this point.

Whoa, Paul - sorry, man - you may think that's the case, but I don't trust those guys any farther than I can spit. Too many tea leaves say differently than what you're saying. Dog hasn't died or any of that stuff - just plain don't trust the U.S. Govt and it's minions. They scare the hell out of me.

I am losing faith that the opposition to proper monetary policy will ever understand that economics is a science, and with the rigor of a science, determinations are made for the betterment of our society.

The 'rigor of a science' means that one actually considers alternatives that are in opposition to the theory in question. By applying opposing pressure to a given theory, legitimacy prevails as challenged by the data itself. A bunch of self-congratulatory bureaucrats surrounding themselves with like-minded sycophants is not scientific rigor. Nor is using 'managed data' designed to influence outcomes.

A lot of you are just angry with your lives. Maybe you lost your job, or fell out of love with a partner, ...

Congratulations for tuning into that anger... too bad you choose to ignore your role in guiding policy that is designed as a 'heads I win, tails you lose' for the citizens you so condescendingly dismiss. To reject this anger as personal baggage is to ignore at your peril what is simmering beneath the surface. In your arrogance you presume to know what is best for everyone, with a myopic view that really suits your own bloated ego. You seek to create rules, such as "retail investors have no place owning gold," and you implicitly or explicitly exempt your cronies (institutional investors, Apple, Intel). You don't seek to level the playing field, but to control it for your own gratification.

...but whatever it is, please understand that there is a group of people who have your best interests at heart and will do what is right so to put us back on track.

Reading this is just nauseating. What utter arrogance. You are truly a hero in your own mind. You use your connections in the influential "group of people" to set policy based upon a one-sided view, ignoring outcomes for the citizens being ground under the wheels of government policy and force.

The middle class has been sold a plethora of lies about how working hard, making sacrifices, doing the 'right thing' will bring rewards. What do we get, but a bunch of inept, cronyist policymakers whom, having screwed the pooch royally, now greedily lick their chops at the latest meal on the plate... the middle class. Of course, this intention is disguised by labeling us as 'rich', in spite of the fact that once policy has decimated the value of retirement savings, many of us will look forward to a meagre income in our later years despite our willingness to save for the future. One way or another, through inflation or taxation, our assets will be siphoned to pay for the grandiose schemes of entrenched revolving-door bureaucrats and 'scholars'.

Despite the odds stacked against them by the government/financial circle jerk, a few people are still managing (or at least trying) to scrape together some sort of a secure future through savings and sacrifice. These people are having roadblocks thrown in their face left and right by policymakers and their 'altruistic' advisors... 'altruistic' not with their own resources but with other people's money and future prospects. Theft of wealth in any way possible, through inflation and policy decisions that seek to force people into risk assets and away from any possible security (such as your "retail has no place owning gold" idea).

2) Politicians and political parties that reflect the same side of the coin - the vested interests of the lobbiests/corps vs. citizenry.

3) Education system. Which really is a propiganda programming system to create stupid slave class.

4) Almost the entire Scientific establishment who would rather ban, cajole and harass people with new ideas that fall outside of the established and accepted norms rather than explore them in real ways.

Virtually everyone who is a professional in their fields knows that certian elements of actual science involve a form of art. This is why there are better welders, better scientists, better programmers. If life was just science everyone would be identically the same because 'art' or creative thought/observation wouldn't produce 'better' anything. Sometmies this yields to science sometimes it simply can't be explained OR duplicated. For instance the difference between Steve Jobs and Bill Gates (as well as their products) or Edison and Tesla.

Too many people seem to forget that humans are feeling, subjective beings and not objective, robotic machines. Some people seem to want a world where everything reduces to black and white and 1's and 0's so they don't have to think too much, or feel anything because all those subjective emotions create loss of control.

What IS control anyway?? The power to transform a human into 'this' (a battery/ala slave).

I'm sorry but the robotic unfeeling/uncaring science going on in all aspects of human life and society is leading us straight down the path not just to a totalitarian state, but total destruction. And before someone goes off on a half nut here, realize I have no interest in going to the other side of touchy feely subjective views. (imo) Science and the seeking of objective verifiable truths and reality IS important, but doing so to the exclusion of how people feel or their 'spirituality' ignores the entire scope of what being human is.

"please understand that there is a group of people who have your best interests at heart and will do what is right so to put us back on track."

<Dear Goy, Please understand that there is a group of jews who have our best interest at heart and will do what is right to put US back on track (for world domination). >

"In this New World Order the children of Israel will furnish all the leaders without encountering opposition. The Governments of the different peoples forming the world republic will fall without difficulty into the hands of the Jews. It will then be possible for the Jewish rulers to abolish private property and everywhere to make use of the resources of the state. Thus will the promise of the Talmud be fulfilled, in which is said that when the Messianic time is come, the Jews will have all the property of the whole world in their hands." — Baruch Levy, Letter to Karl Marx, 'La Revue de Paris', p.574, June 1, 1928

Might be chippy, not frothy by the bell. In any event, it's merely a bounce. It's gonna close down around 200 tomorrow, bounce again Thursday/Friday and fall into remission on Monday 3-3-13 by about 90 more. No bout adout it, we're headed down again. Soros picks up $300-400 million on this sequester-ridden POS market.

Bernanke downplays costs of easing2....Bernanke acknowledges that a long period of low rates could encourage excessive risk-taking, but concludes that the potential costs outweigh the benefits of promoting a stronger recovery and more rapid job creation.

Uh...don't you have that backwards Monsieur SocGen?

Bernanke believes that the benefits of low rates outweigh the costs so he's pressing forward with more cowbell.

The economy is not in sync with the Fed. Bernanke, no matter what he does now, is digging himself deeper into a hole. It’s too big now; he can't recover.

And he doesn’t have the politics down.

That question from Shelby says it all; it says you are in over your head. And Bernanke replies, Japan was worse!

Just because Bernanke says the opposite doesn’t mean that the bankers aren’t in deep crisis. And just because he keeps digging the same hole deeper doesn’t mean he knows how to pull out of it.

The stock market is going to drop heavily, IMO, soon; all the numbers are working against it. Bernanke’s testimony substantiates it; the only thing he's counting on to save the system a few days more is to hold the market up; and everything he’s saying is fashioned to do that, to try to keep the investors in the market.

But the economy is too far down for them to recover it.

In short, everything I read here recapped by SocGen is just a filthy lie. The things that Bernanke says they didn’t do, they did. The things he says don’t matter, matter. The things he says are going to happen, don’t happen. Every step he’s taken, is a step that has taken the economy down. He’s developed a position from which he can’t recover.

His explanations are like Obama's. If you hate blue you say you love the sky; if you hate shit, you say you love your horse. Same old shell game - but the stakes, OMG, are so high you can't see the top from here or from where he, Bernanke, sits. What a house of cards. A ballon blown up with other peoples gas - and oh, what a stinker it's gonna be when it deflates.

Watching him I felt like he had no grasp of the obvious consequences of manipulating the market, that being when you stop the whole world will stop with you. He thinks he is dealing with numbers that can be adjusted up or down but in reality it's sentiment that he is messing with and it is controlled with a switch. It's 'Fed In or Fed Out" it's on or off, it can't be adjusted or "feathered". When they begin to unwind, the direction that things will go is well understood and the stampede to the exit will be epic.

Watching him I felt like he had no grasp of the obvious consequences of manipulating the market

COME ON PEOPLE!! Wake UP! These LIARS are exactly THAT! LIARS!&nbsp; Most people here on ZH seem to think this is all about ignorance in government! Wake UP! They are the wolves and we are supposed to be the sheep. That is their perspective... pay attention. You don't even have to 'read between the lines'... They have spelled it all out for us but most have been too busy watching the f***ing circus and jew hollywood productions for our 'Entertainment' to seek out the reality!&nbsp;</p><p>Bernake and the rest of the duel citizens in DC are laughing their asses off at the ignorant 'goy'

These 'people' really believe this shit they are pushing and lying about to the so-called goy! This is NOT a game, this is NOT a drill...this is for real

"Our race is the Master Race. We are divine gods on this planet. We are as different from the inferior races as they are from insects. In fact, compared to our race, other races are beasts and animals, cattle at best. Other races are considered as human excrement. Our destiny is to rule over the inferior races. Our earthly kingdom will be ruled by our leader with a rod of iron. The masses will lick our feet and serve us as our slaves."— Israeli Prime Minister Menechem Begin

"The governments of the peoples included in this world republic, with the aid of the victorious proletariat, all will fall without difficulty into Jewish hands. Private property will then be strangled by the Jewish directors, who will administer the state patrimony everywhere. Thus the promise of the Talmud will be fulfilled, that is, the promise that the Jews, at the arrival of the Messiah, will possess the key to the wealth of all the peoples of the earth." - Baruch Levy, in a letter to Karl Marx, published in the Rothschild controlled La Revue de Paris, June 1, 1928.

Had to love when Old Ben proclaimed himself as having "the best inflation record of any Central Banker in history" WTF?!? Having a juiced CPI definitely helps in that regard. The Senators are all to ignorant to call him out on that one. Bring back Ron Paul!

Naturally, the Fed and its most vocal constituencies -- Wall Street and politicians -- see nothing much to worry about. Wall Street sees a reflation as a way to ease its credit problems, as price increases ease debt burdens and perhaps reflate housing values. Congress and the White House see a way to perhaps avoid a near-term recession, which might get them past the election.

As for the Fed, its Governors are dusting off their favorite intellectual justifications. We are told that inflation isn't as bad as it seems because "core inflation" -- which excludes food and energy prices -- isn't rising as fast as the consumer price index. However, food and energy are what most Americans are having to spend ever more of their paycheck to buy. Thus the Bernanke reflation is in part self-refuting even as a short-term recession antidote, because it robs consumers of some of their discretionary income just when the economy needs it.